Wednesday, June 19, 2013

United follows suit with Delta's double down devaluation

To no one's surprise, United is implementing a revenue based elite-qualifying system for the 2014 qualification year. Rumors of this change have been brewing for years even before United's merger with Continental, but nothing materialized until now. Following the heels of Delta, United is officially weeding out their bottom feeders and thinning out their elite ranks.

Whereas meeting the PQD requirements may not be too difficult for savvy business travelers, this change effectively eliminates mileage running. Last January, American Airlines had a triple EQM promo between SFO and ORD, and I earned top-tier Executive Platinum status by spending less than $1,800. But as you can see in the above chart, I'd still be a hefty $8,200 short of top-tier status had AA used a revenue based system.

To add insult to injury, United is also upping their fees for award flight changes exclusively for non-elite members. Aside from free stopovers and open jaws, one of the gems of United award travel was the ability to change travel dates without incurring a fee. But effective today, any date changes 21 days out or 21 days in will cost you $75 or $100, respectively. Furthermore, you'll now be down $200 if you cancel an award ticket.

In essence, there will no longer be any fast tracks and "free meals" to earning elite status with United and Delta. As elite status benefits have also taken a royal shafting, this is just another path that these legacy carriers are taking in light of their razor-thin profit margins. All said and done, this is likely the future of frequent flyer programs,
and AA will likely follow suit after their merger with US Airways.

5 comments:

I have no problem with these changes. $2500 is diddly squat for business travelers - I've only logged 18k miles on UA this year but am probably closing in on $5k for the year. It's eminently sensible for airlines to crack down on mileage runners like you who reap benefits that are wildly disproportionate to your revenues.

The next UA announcement will probably be to increase the credit card annual fee to $125+. They are trying to butter us up with the foreign exchange fee elimination. Only way I'm going to hold on to the card is if they start allowing me to earn PQM's on credit spending.

The annual fee is up to Chase and not United. And if there was an increase in the annual fee, you will have been grandfathered in, just like how Continental Onepass Plus card holders got to hold onto their $85 annual fees even after their cards were converted over to the United Explorer card with a $95 annual fee.

The card will still be beneficial to some as spending $25k per year exempts them from all the PQD requirements with the exception of 1K status.If you're going to cancel your card, remember to request a credit line transfer to another Chase card or for a conversion to a no-annual fee card.

That benefit will apply to less than 0.5% of cardholders. Most people have it for the checked baggage and priority boarding benefits, and those may be enough to persuade folks to pay a triple digit annual fee. $125 will be the new $50 when it comes to credit card fees.